Louisiana-Pacific CEO is unlikely ally of Canada
From The Globe And Mail - Monday, March 12, 2001
WASHINGTON -- Mark Suwyn sounds like a
born-again Christian as he recalls his days as a
member of the powerful U.S. lumber lobby.
Mr. Suwyn was a top executive of International
Paper Inc. and a key player in the
Washington-based Coalition for Fair Lumber
Imports when Canada and the United States battled
over softwood lumber in the mid-nineties.
"I was a member of the coalition and I thought
there were serious subsidies," Mr. Suwyn
acknowledged.
But that was then. Now, Mr. Suwyn, 57, is
chairman and chief executive officer of
Louisiana-Pacific Corp. of Portland, Ore., which
owns sawmills and building product plants across
Canada and the United States. And he categorically
rejects the coalition's central argument: that
Canada gives its industry billions of dollars a year
in illegal subsidies.
"Once I got into actually operating on both sides of
the border, which we actually do at
Louisiana-Pacific, all of a sudden I can't find the
subsidies. So my eyes have been opened
considerably."
The head of one of the largest U.S. forest products
companies has emerged as an unlikely ally of
Canadian lumber producers as they prepare to
wage war once more. While other U.S. companies
operating in both countries, such as Weyerhaeuser
Co. of Tacoma, Wash., have stayed neutral in the
debate, Louisiana-Pacific is stridently pro-free
trade.
Why the change of heart?
Mr. Suwyn, who joined the company in 1996, fears
that Canada and the United States are headed
toward a senseless and lengthy trade war over
claims he insists are baseless.
"Here we are about to launch a trade war and I
can't find the subsidy," he said bluntly. "This
[dispute] has a 30-year history. The pattern is that
the U.S. believes there is a subsidy and threatens to
put in a duty, and [the authorities] look at it and say
they can't find a subsidy."
Louisiana-Pacific's perspective on cross-border
lumber issues changed dramatically when it bought
Groupe Forex Inc. of Quebec in mid-1999 for
$516-million (U.S.). The company had sales last
year of $2.8-billion, including $455-million in
Canada.
Louisiana-Pacific has plants in 21 U.S. states from
Maine to Texas and operates in three Canadian
provinces -- British Columbia, Quebec and
Manitoba.
For decades, the U.S. industry has targeted
so-called Canadian stumpage rates -- the fees that
provinces charge producers for cutting timber on
government land. The coalition argues that Canada
is literally giving away its trees for pennies on the
dollar.
The coalition has vowed to launch countervailing
and anti-dumping lawsuits on April 2, demanding
that Canadian lumber be hit with billions of dollars
in duties.
The problem facing the U.S. industry is a lack of
trees, not Canadian subsidies, Mr. Suwyn said.
There's less wood being cut in U.S. national
forests, particularly in the U.S. Northwest, and
anyone without private land holdings is out of luck.
Without guaranteed timber supply, many U.S. mills
have failed to modernize, he said. Allegations that
Canada is subsidizing, and now dumping, are just a
pretext by the U.S. industry to shield those
producers, he said.
"The real issue is that if you have a mill in Canada
or the United States that you have not modernized
over the last 20 or 30 years, you're going to have a
hard time competing because there is more
capacity than there is demand," he said. "Only the
highly efficient, modernized mills are going to
survive. It's just a fact of life."
Under the Canadian system, where nearly all land
is held by the provinces, companies can negotiate
15- to 25-year leases, which provide the long-term
stability needed to invest in processing capacity,
he pointed out.
And the claim of a massive subsidy in Canada is
just pure fiction, Mr. Suwyn said. What many
Americans don't realize is that Canadian lumber
producers are responsible for significant forest
management costs on their logging tracts.
"So when the U.S. coalition focuses only on the
stumpage fee, they choose not to look at the whole
picture," he said.
He also warned that if Canada bows to U.S.
demands and adopts a competitive timber auction
system, the coalition might be in for a surprise.
Stumpage rates might actually fall, not rise,
because in most areas only one company is in a
position to log an area economically.
More damaging still, Mr. Suwyn said, is the fact
that the looming lumber war comes at a
particularly bad time for the North American
lumber industry. Environmental threats,
competition from man-made building materials
such as steel, and offshore competition are eroding
the industry's market share.
If the United States hits Canada with tariffs,
duty-free wood from Scandinavia, Eastern Europe,
New Zealand and South America will fill the void,
perhaps permanently, he argued.
"To now go spend a lot of time and energy and
money to fight a trade war that doesn't have a
satisfactory end point is a waste," he lamented.
"We have to get on some path . . . to free trade." |
